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The mega potential of the supply chain

The mega potential of the supply chain

Volkswagen is doing everything in its power to make its contribution to achieving the Paris climate targets. CO2-neutral components and raw materials play an important role. Check this overview and three info graphics.

With its major electric offensive, Volkswagen wants to make a contribution to achieving the climate targets agreed in the Paris Agreement. But because the electric car is only as clean as the electricity with which it is produced and charged, the Wolfsburg-based company is now also taking a closer look at the so-called supply chain – e.g. the upstream production of materials and components through to the extraction of the raw materials required for this.

The supply chain is also so important for sustainable e-mobility because the production of battery cells is still very energy-intensive. As a result, the production of an e-vehicle generates significantly more CO2 than that of cars with a combustion engine – around 150 percent on average. Compared to conventional drives, electric cars therefore have a disadvantage in the CO2 balance right from the start. Consistent climate protection must therefore start early.

That is not easy. If a car manufacturer wants to avoid and reduce CO2 in the supply chain, this means a special challenge. Partner companies must be convinced. The supply chains in the automotive industry are widely ramified. And there are no direct business relationships with many participants, such as mining companies. In many cases, the first step is to provide the required transparency. "Transparency in the supply chain – especially for graphite, cobalt, lithium, and nickel – is a prerequisite for the assessment of social and environmental standards", says Dr. Stefan Sommer, Group Board Member for Procurement.

A lot of CO2 can be saved in the extraction of raw materials and the upstream production of materials and components.

With the ID., Volkswagen shows that – despite all challenges – many advances are already possible. The compact electric car, which will go into production at the end of the year, will be the Group's first model to be produced in a balance sheet that is CO2-neutral. This will be made possible, among other things, by the consistent avoidance and reduction of CO2 emissions in the supply chain. A savings potential of roundabout one third was identified for the first step alone by the end of 2019. Currently unavoidable CO2 emissions are offset by investments in certified climate protection projects elsewhere.

Battery production with green power

First of all, Volkswagen is achieving major CO2 improvements in the production of battery cells, one of the hotspots in the supply chain. Their production has been very energy-intensive so far, due to various factors – among other things, a lot of electricity is consumed during the drying of the materials, which are applied in liquid form to a film. The so-called energetic backpack for battery production is a burden on the CO2 balance, especially in countries that have a high proportion of fossil fuels in their electricity mix.

Within the production cycle of the ID., it is therefore very important that the battery cells are produced with green power. They are supplied by LG Chem, which is setting up a production facility in Poland for this purpose. A long time ago, Volkswagen already fixed an agreement with this Korean company, that only certified green power would be used to manufacture the battery cells. By doing so, CO2 emissions will be reduced to almost zero.

Especially in battery production, a high CO2 reduction is possible.

Further focal points for CO2 reductions in the supply chain are production of steel and electric motors. In the case of steel, complex processes – including end-of-pipe technologies, which are only used at the end of the process – can lead to savings of up to 70 percent. In the electric motor, Volkswagen uses recycled aluminum for the housing. The savings potential of these and other measures is 50 percent.

Precise identification of components

The challenges grow, as you move further along the supply chain, towards raw materials. One hundred percent transparency across all stages is not yet possible. This is reinforced by a high degree of complexity – there are more than 40,000 direct suppliers worldwide, plus a multiple of indirect suppliers. Some of whom are seven to eight stages away from the finished product.

At the moment, several pilot projects are underway at Volkswagen to precisely identify the material origin of goods and to initiate measures if risks are identified. In addition, award criteria have significantly been tightened for suppliers by means of a new sustainability rating: compliance and sustainability performance will thus become a selection criterion as binding as price or quality.

The cobalt issue – the majority of global production comes from a country with difficult mining conditions.

Apart from climate protection, compliance with social standards also plays a central role for Volkswagen when it comes to resource requirements - especially in the responsible mining of E raw materials such as lithium and cobalt. In the future, Volkswagen will check on site whether subcontractors meet the requirements. Further transparency measures include cooperation with other automotive manufacturers and participation in cross-sector initiatives such as the Global Battery Alliance and the Responsible Minerals Initiative (RMI).

In the RMI, for example, Volkswagen is working on a certification system for cobalt melts in order to improve degradation conditions and make the origin of the material traceable. Another example is the “Drive Sustainability” working group. It is developing uniform monitoring instruments and sustainability training courses for suppliers. The targeted reduction of these raw materials within the battery cells is also important. The engineers at Volkswagen research and development are currently also working on this issue.

The specified fuel consumption and emission data have been determined according to the measurement procedures prescribed by law. Since 1st September 2017, certain new vehicles are already being type-approved according to the Worldwide Harmonized Light Vehicles Test Procedure (WLTP), a more realistic test procedure for measuring fuel consumption and CO2 emissions. Starting on September 1st 2018, the New European Driving Cycle (NEDC) will be replaced by the WLTP in stages. Owing to the more realistic test conditions, the fuel consumption and CO2 emissions measured according to the WLTP will, in many cases, be higher than those measured according to the NEDC. For further information on the differences between the WLTP and NEDC, please visit www.volkswagen.de/wltp.

We are currently still required by law to state the NEDC figures. In the case of new vehicles which have been type-approved according to the WLTP, the NEDC figures are derived from the WLTP data. It is possible to specify the WLTP figures voluntarily in addition until such time as this is required by law. In cases where the NEDC figures are specified as value ranges, these do not refer to a particular individual vehicle and do not constitute part of the sales offering. They are intended exclusively as a means of comparison between different vehicle types. Additional equipment and accessories (e.g. add-on parts, different tyre formats, etc.) may change the relevant vehicle parameters, such as weight, rolling resistance and aerodynamics, and, in conjunction with weather and traffic conditions and individual driving style, may affect fuel consumption, electrical power consumption, CO2 emissions and the performance figures for the vehicle.

Further information on official fuel consumption figures and the official specific CO2 emissions of new passenger cars can be found in the “Guide on the fuel economy, CO2 emissions and power consumption of new passenger car models”, which is available free of charge at all sales dealerships and from DAT Deutsche Automobil Treuhand GmbH, Hellmuth-Hirth-Str. 1, D-73760 Ostfildern, Germany and at www.dat.de.